Through this course, you will start by addressing the two “big questions” of accounting: “What do I have?” and “How did I do over time?” You will see how the two key financial statements – the balance sheet and the income statement - are designed to answer these questions and then move on to consider how individual transactions aggregate to make up these financial statements. After developing a broad understanding of accounting and financial statements, you will begin to develop a more nuanced understanding of individual components of doing business, such as making a sale or building inventory. By considering many of the more common actions of a company, you will build your understanding of accounting, and explore these concepts by applying them across various types of transactions. Once you understand these individual concepts better, you will be ready to return to the overall financial statements and use them as informational tools, including building ratios.
You can do this course standalone or to qualify for the residential component of the Finance for Strategic Decision-Making Executive Education program. For more information, see the FAQ below.

From the lesson

Liabilities and Stockholders Equity

In the last two modules we have been exploring assets and their impact on both the balance sheet and income statement. In this module we will turn to discussing the other two components of the balance sheet: liabilities and owners equity.As firms operate, they make promise to deliver value to other entities. Accountants call these promises liabilities. You have already seen some liabilities as we discussed assets - after all, you get many assets by promising to give up future value. We will review those liabilities here as well as introducing a few new ones.
Firms also have owners. Those owners sometimes directly provide capital and other times let managers retain capital generated by firm operations. Combined, those two sources of capital represent owners equity. We will discuss interaction with owners and how they impact our firms economic situation. We will also discuss how the accounting statements reflect these interactions.